Intelsat, SES Willing to Promise Future Business for Bankrupt Sea Launch

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PARIS — The chief executives of the world’s two biggest commercial satellite fleet operators, Intelsat and SES, said they are willing to provide written promises of future launch contracts to aid Sea Launch Co. in its effort to exit bankruptcy under new ownership.

In separate interviews here Sept. 8 during the World Satellite Business Week organized by Euroconsult, Intelsat’s David McGlade and Romain Bausch of SES said they view the return of Sea Launch as critical to the smooth functioning of the global satellite telecommunications industry.

McGlade said having just two principal commercial-launch suppliers, Arianespace of Europe and International Launch Services (ILS) of Reston, Va., which markets Russia’s Proton rocket, is insufficient.

“We like what Arianespace and ILS do, and we are very supportive of them,” McGlade said. “But if you believe they could one day be grounded following a failure — even if you believe that ultimately Indian or Chinese [launches] or [U.S.-based Space Exploration Technologies] SpaceX will be available — then God help you.”

Bausch said Luxembourg-based SES views Sea Launch’s return to operations as a necessary part of SES’s broader effort, made with Intelsat and others, to encourage more companies to take part in the commercial launch market.

Intelsat has one firm launch and several launch options pending with Sea Launch. SES has no existing contracts but is one of Sea Launch’s creditors. Bausch said SES had paid about $29 million to Sea Launch to be one of the inaugural customers of Sea Launch’s Land Launch affiliate, which is dedicated to smaller satellites. Land Launch suffered delays and SES eventually contracted with Arianespace of Europe to launch the satellite, called AMC-21. The launch occurred in August 2008.

Two U.S. satellite manufacturers, Boeing and Space Systems/Loral, also voiced support for Sea Launch, saying the company’s disappearance would not be good for builders of large commercial telecommunications spacecraft.

Craig Cooning, vice president and general manager of Boeing Space and Intelligence Systems, made similar comments in a Sept. 8 briefing with reporters here. Cooning, saying he was speaking only as a satellite builder and not on behalf of Boeing as a 40-percent Sea Launch equity owner, said the disappearance of Sea Launch would expose the commercial satellite business to unacceptable risks.

Stephen T. O’Neill, president of Boeing Satellite Systems International, said Sept. 9 that Sea Launch’s disappearance would leave the global commercial satellite industry in a single-point-failure position insofar as it would automatically suffer if one of the two other commercial launch suppliers, ILS or Arianespace, were grounded for months following a launch failure.

Cooning said Boeing’s ownership stake in Sea Launch is held by another Boeing division. Boeing and another Sea Launch shareholder, Aker Marine of Norway, have been obliged to make good on more than $400 million in Sea Launch debt as a result of Sea Launch’s Chapter 11 bankruptcy proceeding.

Cooning said Boeing would remain a supplier to Sea Launch, assuming it emerges from bankruptcy. Long Beach, Calif.-based Sea Launch filed for Chapter 11 bankruptcy protection in June and is now under the administration of the Delaware Bankruptcy Court.

Intelsat has already written the bankruptcy court handling Sea Launch saying the company intends to be a Sea Launch customer in the future. Bausch told reporters here Sept. 8 that SES is willing to submit written support of a similar nature. Bausch cautioned that such backing would stop short of a binding commitment.

Intelsat and SES are part of a group of satellite operators and others lobbying the U.S. government to urge U.S. authorities to facilitate the entry of more rockets into the commercial market. In particular, Bausch said, the group wants future access to Chinese rockets, now subject to a U.S. ban. The group is also asking the U.S. government to use its influence to encourage the return to the commercial market of U.S. Atlas 5 and Delta 4 rockets, which have both retreated from most commercial activity because the business is insufficiently profitable compared to focusing on launching U.S. government satellites.

Sea Launch Chief Executive Kjell Karlsen said the company is working on a scenario in which Sea Launch, which places heavy telecommunications satellites into geostationary orbit from a floating platform on the equator in the Pacific Ocean, can be profitable by launching just four times per year.

In a Sept. 7 interview, Karlsen said Sea Launch will be able to reduce its future operating costs to around $4 million per month, down from $5 million to $5.5 million it has been spending.

Freed of most of its debt as a result of the bankruptcy proceedings, Sea Launch is currently seeking a backer willing to invest around $100 million to $150 million in the company — enough to permit a restart of operations. An exit from Chapter 11 could occur by next March, with a return to operations in late 2010, Karlsen said.